Berkshire held 3.98 million shares of the Moline, Illinois-
based company at the end of the third quarter, Buffett’s firm
said yesterday in a regulatory filing disclosing U.S. equity
holdings. The Omaha, Nebraska-based company cut consumer-
products stocks including Johnson & Johnson and Procter & Gamble
Co. (PG) in the period ended Sept. 30.

Buffett, who built Berkshire with long-term equity bets on
companies including Coca-Cola Co. (KO) and American Express Co. (AXP), has
given investment managers Todd Combs and Ted Weschler more
responsibility for an $88 billion stock portfolio. Deere may
benefit in coming decades as farmers seek to boost yields to
feed a surging population, according to Eli Lustgarten, an
analyst for Longbow Research in Independence, Ohio.

“We have a massive need to increase productivity in the
farm belts of the world,” Lustgarten said in a phone interview.
“Deere is the global leader” in making products to accomplish
that, he said. “Best technology, best-managed company.”

Buffett’s stock picks are watched by mutual funds and
individuals looking for clues about his strategy. Deere, which
reports fourth-quarter results next week, advanced 0.8 percent
to $85.39 at 4:01 p.m. in New York.

The maker of products including tractors, mowers and dozers
missed quarterly earnings estimates and cut its full-year profit
forecast in August amid slowing sales in Asia and Latin America,
leading to the stock’s biggest one-day fall in more than a year.
U.S. farmers’ purchasing power may be hurt this year amid the
country’s worst drought in five decades.

Stock Volatility

Deere traded as low as $72.85 in the three months ended
Sept. 30 and closed the quarter at $82.47. The volatility may
have given Berkshire a buying opportunity, Lustgarten said.
Buffett, the world’s fourth-richest person, has said he built
his fortune by investing in companies the market mispriced.

The holding adds to Berkshire investments tied to
agriculture. Buffett praised employees at CTB Inc., a unit that
makes products for the hog and poultry industries, saying in
2010 that it would expand for decades and was on a farming
“superhighway.” Buffett’s son Howard, a farmer and Berkshire
director since 1993, endorsed the deal to buy CTB in 2002.

“They’ve already got a toe in the farm pond,” Stephen Volkmann, a New York-based analyst at Jefferies Group Inc., said
in a phone interview. “Maybe they’ve decided that global ag is
a long-term cycle.”

Consumer Stocks

Buffett, 82, has been reducing Berkshire’s holdings of
consumer-products stocks this year as he weighs acquisitions and
gives more money to Combs and Weschler. Buffett has said he
manages the company’s larger investments while his deputies
oversee smaller stakes. In July, he said each would probably
manage about $4 billion, compared with $2.75 billion at the
beginning of the year.

Berkshire’s holding in J&J plunged 95 percent to 492,000
shares in the third quarter, while the P&G stake declined 11
percent to 52.8 million shares. An investment in Kraft Foods
Inc., which split after the third quarter’s end into Mondelez
International Inc. (MDLZ) and Kraft Foods Group Inc. (KRFT), also dropped.

Elephant Hunting

Buffett may be selling the consumer stocks to provide more
funds to his deputies while reserving money for a large
acquisition, said David Kass, a professor at the University of
Maryland’s Robert H. Smith School of Business. Berkshire’s cash
pile climbed to $47.8 billion in the third quarter, buoyed by
the stock sales and earnings at operating units.

“He may be really wanting to keep that aside for his big
elephant,” said Kass, who has accompanied students to meet the
Berkshire chairman and chief executive officer in Omaha.

Buffett has used hunting references to describe his
eagerness for acquisitions, telling shareholders in a letter
last year that “Our elephant gun has been reloaded, and my
trigger finger is itchy.”

Among Berkshire’s other new holdings were about 1.2 million
shares in Portland, Oregon-based Precision Castparts Corp. (PCP),
valued at about $216 million at yesterday’s closing price,
assuming no shares were bought or sold since Sept. 30.

Precision, Wabco

Precision, whose products include metal forgings for jet
engines, has made more than 20 acquisitions in the past decade
under CEO Mark Donegan, according to data compiled by Bloomberg.
Donegan announced on Nov. 9 an agreement to pay $2.9 billion for
billionaire Harold Simmons’s Titanium Metals Corp. (TIE)

Buffett’s firm also disclosed a 1.6 million-share stake in
in Piscataway, New Jersey-based Wabco Holdings Inc. (WBC), a maker of
braking and suspension systems for commercial vehicles. The
holding would have been worth $92.2 million at yesterday’s
close.